US Department of Treasury
Office of Tax Analysis
Washington DC 20020
Institutional Affiliation: US Department of Treasury
NBER Working Papers and Publications
|July 2009||Understanding U.S. Corporate Tax Losses|
with Rosanne Altshuler, Alan J. Auerbach, Michael Cooper
in Tax Policy and the Economy, Volume 23, Jeffrey R. Brown and James M. Poterba, editors
|October 2008||Understanding U.S. Corporate Tax Losses|
with Rosanne Altshuler, Alan J. Auerbach, Michael Cooper: w14405
Recent data present a puzzle: the ratio of corporate tax losses to positive income was much higher around 2001 than in earlier recessions. Using a comprehensive 1982-2005 sample of U.S. corporation tax returns, we explore a variety of potential explanations for this surge in tax losses, taking account of the significant use of executive compensation stock options beginning in the 1990s and recent temporary tax provisions that might have had important effects on taxable income.
We find that losses rose because the average rate of return of C corporations fell, rather than because of an increase in the dispersion of returns or an increase in the gap between corporate profits subject to tax and NIPA corporate profits. Our analysis also suggests that the increasing importance of S corpor...